The Effects of Currency Substitutionon the Response of the Current Account to Supply Shocks

Nopic
Standard real models predict that a permanent increase in oil prices would result in a current account surplus. This is due to the fact that investment falls while saving remains unchanged. This paper shows that if currency substitution is introduced into the analysis, the same shock could cause a current account deficit. Furthermore, the higher... READ MORE...

Publication date: January 1988
ISBN 9781451929454
$10.00

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